June 06, 2006	Tuesday	Jumadi-ul-Awwal 9, 1427

ISLAMABAD, June 5: The government on Monday rationalised rates of withholding taxes on various goods and services, exempted various kinds of machinery from income tax and reduced the age limit for seeking exemptions of the senior citizens.

Through the Finance Bill 2006, the government proposed reduction in tax rate for inter corporate dividends from 10pc to 5pc; exemption on corporatisation of individual stock exchange membership proposed up to June 30, 2007 along with exemption for room in the stock exchange.

It has also been proposed to remove the limit/restriction on expenses incurred by an employer on provision of perquisites to employees; rationalisation of advance tax estimate regime on the basis of current year income; reduction of the exemption of withholding tax from 100pc to 75pc in the case of certain importers.

Through the bill, it has been proposed to allow depreciation at the rate of 30pc for the machinery producing IT products; exemption to venture companies proposed to be extended up to 2014; withholding tax on import of motor cars and fertiliser by manufacturers proposed to be made adjustable; minimum tax on turnover on Murabaha financing proposed to be withdrawn and tax credit for investment in IPOs — limit for investment for tax credit proposed to be enhanced from Rs150,000 to Rs200,000.

According to the finance bill, the Real Estate Investment Trust (REIT) income has been proposed to be exempted; minimum tax in the cases of trading houses proposed to be suspended for first 10 years; services of sizing and weaving proposed to be deemed as exports; rebate for teachers and researchers proposed to be extended to officers posted in government training institutions and tax rebate for senior citizens age limit proposed to be reduced from 65 to 60 years.

It has been proposed that to exempt tax on import of Radio Navigational Aid Apparatus by airports; agriculture income proposed to be excluded from personal tax rate card; exemption given to Pakistan Engineering Council; exemption to export of locally developed television programme; withholding Tax rate on government securities proposed to be rationalised; withholding tax on commission and brokerage proposed to be made uniform.

Presumptive Tax Regime (PTR) proposed to be extended to services; withholding tax on various imports proposed to be rationalised; withholding tax on supplies of raw hides and skins proposed to be withdrawn to provide level-playing field; taxation of carryover trade (COT), (badla) in stock exchanges exemption available to mutual funds proposed to be withdrawn; withholding tax rate proposed to be enhanced in cases where NTN/CNIC was not disclosed.

It was proposed to extend PTR on profit on debt; regional commissioner of income tax proposed to be authorised to revise an order of the commissioner in matters relating to withholding tax regime; commissioner proposed to be authorised to allow extension of time for filing periodical statements; electronic filing of withholding tax statements by certain classes of prescribed withholding agents proposed to be made mandatory; monthly filing of withholding tax return/statement proposed to be made mandatory; provisions relating to deductibility of expense made through banking channel proposed to be rationalised; filing of return by non-profit organisations (NPOs) proposed to be made mandatory.

Government departments proposed to be specifically exempted from withholding tax; scope of tax on retailers was proposed to be extended; periodic statement regarding certain transactions proposed to be introduced.